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Business, 13.08.2020 21:01 july00

Marty, a musician, frequently plays at large parties and nightclubs. Marty has musical equipment worth $8,000, and he takes precautions to prevent theft. The marginal benefit of these precautions is given by MB = 60 – 3A, where A is the number of precautions Marty takes. The marginal cost of preventing theft (i. e., the time, energy, and effort expended) is given by MC = 2A. Suppose Marty purchases full insurance that pays him $8,000 if his gear is stolen. What is Marty's optimal level of precautions?

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